Q3 2016 CANADIAN CAP RATES & INVESTMENT INSIGHTS
A quarterly snapshot of Canadian commercial real estate cap rates and investment trends.
Canada INVESTMENT TRENDS
Q3 2016 CAP RATES
While few would have predicted it, the national average cap rate moved lower yet again in Q3 on the back of incredibly strong investment activity in Vancouver and Toronto. Cap rate movement continues to be asset and market-specific; however, most sectors showed no change in overall cap rates. Spreads over 10-year Canada bond yields remain at historic highs and are supportive of the lower cap rate environment.
DOWNTOWN OFFICE
rQ/Q
AA
4.96%
q
A
5.69%
q
B
6.41%
q
A
6.41%
q
B
7.16%
q
A
5.73%
q
B
6.77%
q
Regional
5.27%
q
Power
6.03%
q
Neighbourhood
6.25%
q
Strip
5.91%
q
Strip (non-anchored) 6.88%
q
SUBURBAN OFFICE
INDUSTRIAL
RETAIL
RECORD LOW NATIONAL AVERAGE CAP RATE * 12% 10%
212 bps
8%
426 bps
6%
230 bps 463 bps
4% 2%
486 bps
Paul Morassutti Executive Vice President Valuation & Advisory Services www.cbre.ca/paul.morassutti
VIEW ALL CANADIAN CAP RATES ON PAGE 12
* Source: CBRE Limited, Bank of Canada
Q3 2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1990
-
1992
All-Properties National Average Cap Rate 10-Yr GoC Bond Yield
APARTMENT
High Rise A
4.18%
q
High Rise B
4.89%
q
Low Rise A
4.70%
tu
Low Rise B
5.34%
q
Downtown Full Service
7.72%
q
Suburban Limited Service
9.03%
q
Focused Service
8.30%
q
HOTEL
2
Canada INVESTMENT TRENDS
Q3 2016 CAP RATES
Despite ongoing economic and geopolitical uncertainty, robust capital liquidity persists across much of Canada. The exception is Alberta where financing considerations extend beyond conventional real estate metrics to include client relationship analysis, lender exposure to other loan asset classes, and general optics. There is acceptance that the low interest rate environment will endure as CMBS product seems to be gaining investor acceptance with several CMBS originators narrowing pricing requirements in hopes of creating momentum.
CAD/USD 2015 Q3
2016 Q3
$0.75
$0.76
Change YoY (%) p
2.12%
CANADA PRIME RATE 2015 Q3
2016 Q3
2.70%
2.70%
Change YoY (%) tu
0.00%
30-DAY CDOR 2015 Q3
2016 Q3
0.80%
0.90%
Change YoY (%) p
12.50%
MORTGAGE RATES TO GOVERNMENT OF CANADA BONDS WEST TEXAS INTERMEDIATE (USD)
4.00% 3.50%
2015 Q3
2016 Q3
$45.06
$48.11
Change YoY (%)
3.00% 2.50%
p
6.77%
2.00% 1.50%
5-YEAR MORTGAGE SPREAD RANGE
1.00%
2015 Q3
0.50% 0.00%
Sep-15
Oct-15
Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16
5-Yr Commercial Mortgage Rate 10-Yr Commercial Mortgage Rate
Jul-16
Aug-16 Sep-16
5-Yr GoC Bond Yield 10-Yr GoC Bond Yield
Carmin Di Fiore Executive Vice President Debt & Structured Finance www.cbre.ca/carmin.difiore
VIEW ALL CANADIAN CAP RATES ON PAGE 12
*Source: CBRE Limited, Bank of Canada, October 2016
2016 Q3
1.90%-2.35% 1.80%-2.50% p
Change YoY (%) 8.59%
10-YEAR MORTGAGE SPREAD RANGE 2015 Q3
2016 Q3
1.85%-2.35% 1.90%-2.50% p
Change YoY (%) 4.76%
Source: CBRE Limited, Bank of Canada, Thomson Reuters Eikon, October 2016
3
Vancouver INVESTMENT TRENDS
There are early signs that foreign investment capital ¥ may be shifting to commercial properties which are not subject to the new tax on foreign investors in B.C.
Q3 2016 CAP RATES DOWNTOWN OFFICE
rQ/Q
AA
3.75% - 4.00%
q
A
3.75% - 4.25%
q
B
4.00% - 4.50%
q
A
4.75% - 5.50%
q
B
5.00% - 5.50%
q
SUBURBAN OFFICE
INDUSTRIAL
Vancouver accounted for 96.0% of Chinese investment in commercial real estate nationally in H1 2016. Investment from China remains at record levels.
A
4.50% - 5.00%
q
B
5.00% - 5.50%
q
Regional
4.00% - 4.75%
q
Strong demand and the compression of cap rates reflect investor confidence in the B.C. economy and commercial property market.
Power
5.00% - 5.00%
q
Neighbourhood
5.00% - 5.50%
q
Strip
4.75% - 5.25%
q
Strip (non-anchored)
5.00% - 5.50%
q
High Rise A
2.50% - 3.00%
tu
High Rise B
3.00% - 3.50%
tu
Low Rise A
2.75% - 3.25%
tu
Low Rise B
3.25% - 4.25%
tu
Downtown Full Service
5.50% - 6.50%
q
Suburban Limited Service
6.50% - 7.50%
q
Focused Service
6.50% - 7.50%
q
RETAIL
APARTMENT
Jim Szabo Vice Chairman National Investment Team www.cbre.ca/jim.szabo
VIEW ALL CANADIAN CAP RATES
HOTEL
ON PAGE 12
4
Calgary INVESTMENT TRENDS
Beyond the sale A of three Class AA BC office buildings SOLD to CPPIB, overall office investment activity is increasing with several vacant downtown Class B and C properties trading on an attractive per square foot basis. There has been a notable increase in investment activity in recent months. The retail, industrial and multifamily sectors are expected to remain active. Core product is commanding cap rates which are similar to those recorded before energy prices corrected in 2014.
Garry Beres Executive Vice President National Investment Team www.cbre.ca/garry.beres
VIEW ALL CANADIAN CAP RATES
Q3 2016 CAP RATES DOWNTOWN OFFICE
rQ/Q
AA
5.25% - 5.75%
tu
A
6.25% - 7.00%
tu
B
7.75% - 8.50%
tu
A
6.25% - 6.75%
tu
B
7.25% - 8.00%
tu
A
5.00% - 5.50%
q
B
6.25% - 6.75%
tu
Regional
5.00% - 5.50%
tu
Power
5.75% - 6.25%
tu
Neighbourhood
5.25% - 5.75%
tu
Strip
5.25% - 5.75%
q
Strip (non-anchored)
6.25% - 6.75%
tu
High Rise A
4.50% - 5.00%
tu
High Rise B
5.00% - 5.50%
tu
Low Rise A
5.00% - 5.50%
p
Low Rise B
5.25% - 5.75%
tu
Downtown Full Service
7.75% - 8.75%
tu
Suburban Limited Service
9.25% - 10.25% tu
Focused Service
8.25% - 9.25%
SUBURBAN OFFICE
INDUSTRIAL
RETAIL
APARTMENT
HOTEL
tu
ON PAGE 12
5
Edmonton INVESTMENT TRENDS
Landlords across all assets classes are witnessing tenant flight to quality. Building fundamentals are currently at the forefront of tenant decisions.
Q3 2016 CAP RATES DOWNTOWN OFFICE
rQ/Q
AA
5.50% - 6.00% tu
A
6.75% - 7.25%
B
7.75% - 8.50% tu
p
SUBURBAN OFFICE A
6.75% - 7.25% tu
B
7.50% - 8.00%
p
q
INDUSTRIAL
The need to repurpose older office buildings, particularly in Class B and C markets, is dominating the discussion amongst landlords and developers.
A
5.25% - 5.75%
B
6.75% - 7.50% tu
Regional
5.00% - 5.50% tu
Quality retail, industrial and multifamily assets are garnering the strongest interest from investors, while the expectations for the downtown office market continue to adjust to anticipated new supply and vacancy challenges.
Power
5.75% - 6.25% tu
Neighbourhood
5.75% - 6.25% tu
Strip
5.50% - 6.00% tu
Strip (non-anchored)
6.50% - 7.00%
Dave Young Executive Vice President National Investment Team www.cbre.ca/dave.young
RETAIL
APARTMENT High Rise A
4.25% - 4.75% tu
High Rise B
4.75% - 5.25% tu
Low Rise A
5.25% - 5.75% tu
Low Rise B
5.75% - 6.50% tu
HOTEL Downtown Full Service Suburban Limited Service
VIEW ALL CANADIAN CAP RATES
q
Focused Service
7.75% - 8.75% tu 10.00% - 10.50% tu 9.00% - 10.00% tu
ON PAGE 12
6
Waterloo Region INVESTMENT TRENDS
Recent conversion deals in downtown Kitchener and uptown Waterloo have set pricing records. Investor interest in core office and retail projects is also strong.
Q3 2016 CAP RATES DOWNTOWN OFFICE AA
rQ/Q N/A
A
6.00% - 7.00%
tu
B
6.50% - 7.25%
tu
A
6.25% - 7.50%
tu
B
7.00% - 8.00%
tu
SUBURBAN OFFICE
INDUSTRIAL
Cap rates continue to compress across all asset categories on the back of strong investor demand for scare product in Waterloo Region.
A
5.90% 6.50%
tu
B
6.75% 7.25%
tu
Regional
5.50% - 6.00%
tu
Urban/streetfront mixed-use properties are gaining appeal with investors. New developments continue to round out the live-work options in the region.
Power
5.75% - 6.50%
tu
Neighbourhood
6.00% - 6.50%
tu
Strip
5.25% - 6.50%
tu
Strip (non-anchored)
5.25% - 7.00%
tu
High Rise A
4.50% 5.00%
tu
High Rise B
4.75% 5.25%
tu
Low Rise A
5.00% 5.75%
tu
Low Rise B
5.50% 6.00%
tu
Downtown Full Service
8.25% - 9.00%
tu
Suburban Limited Service
8.50% - 9.00%
tu
Focused Service
7.50% - 8.50%
tu
RETAIL
APARTMENT
Peter Whatmore Senior Vice President National Investment Team www.cbre.ca/peter.whatmore
VIEW ALL CANADIAN CAP RATES
HOTEL
ON PAGE 12
7
Toronto INVESTMENT TRENDS
The market is offering RECORD prospective buyers a VOLUMES range of great assets EXPECTED right now, which will likely spur record commercial real estate investment volumes in 2016.
Q3 2016 CAP RATES DOWNTOWN OFFICE
rQ/Q
AA
4.00% - 4.50%
q
A
4.25% - 4.75%
q
B
4.50% - 5.00%
q
A
5.75% - 6.25%
tu
B
6.75% - 7.25%
tu
SUBURBAN OFFICE
INDUSTRIAL
Urban is the name of the game when it comes to commercial real estate investment activity. The larger the urban component of an asset, the more capital that will chase it.
A
5.00% - 5.50%
tu
B
6.50% - 7.00%
q
Regional
4.50% - 5.50%
tu
The second largest investor consideration at the moment is asset age/quality. Investors outside the core are drawn to newer, highquality assets.
Power
5.50% - 6.50%
tu
Neighbourhood
5.25% - 6.25%
tu
Strip
5.25% - 6.25%
tu
Strip (non-anchored)
6.25% - 7.25%
tu
High Rise A
3.25% - 3.75%
q
High Rise B
4.00% - 5.00%
q
Low Rise A
3.25% - 3.75%
q
Low Rise B
4.00% - 5.00%
q
Downtown Full Service
5.50% - 6.50%
q
Suburban Limited Service
7.00% - 8.50%
tu
Focused Service
7.00% - 8.00%
tu
RETAIL
APARTMENT
Peter Senst President, Canadian Capital Markets National Investment Team www.cbre.ca/peter.senst
VIEW ALL CANADIAN CAP RATES
HOTEL
ON PAGE 12
8
Ottawa INVESTMENT TRENDS
Ottawa continues to be a hotbed of investment activity. 2016 is already certain to be remembered for record trades in the office and multifamily sectors.
Q3 2016 CAP RATES DOWNTOWN OFFICE
rQ/Q
AA
5.00% - 5.75%
tu
A
5.25% - 6.00%
tu
B
5.50% - 6.25%
tu
A
6.25% - 7.00%
tu
B
7.00% - 7.50%
tu
A
6.00% - 6.25%
tu
The flight to quality is gaining momentum as a number of institutional owners are looking to trade up their portfolios.
B
6.50% - 7.25%
tu
Regional
5.00% - 5.75%
tu
As is so often the case, the most sought after asset class, core retail properties, has the least amount of supply.
Power
5.75% - 6.50%
tu
Neighbourhood
5.75% - 6.50%
tu
Strip
5.50% - 6.25%
tu
Strip (non-anchored)
6.50% - 7.50%
tu
High Rise A
3.75% - 4.50%
tu
High Rise B
4.75% - 5.50%
tu
Low Rise A
4.00% - 4.75%
tu
Low Rise B
4.75% - 5.50%
tu
Downtown Full Service
7.00% - 8.00%
tu
Suburban Limited Service
8.00% - 9.00%
q
Focused Service
7.50% - 8.50%
tu
SUBURBAN OFFICE
INDUSTRIAL
RETAIL
APARTMENT
Nico Zentil Vice President National Investment Team www.cbre.ca/nico.zentil
VIEW ALL CANADIAN CAP RATES
HOTEL
ON PAGE 12
9
Montreal INVESTMENT TRENDS
Montreal’s value relative to other Canadian cities has AT E! E R U garnered tremendous G AL V interest from national and international players. All commercial property types are being targeted and sales activity is only inhibited by a limited desire to sell. Pent-up demand for retail property has been rewarded with several quality assets coming to market. Cap rates compressed for anchored and non-anchored retail strips, while urban retail is demonstrating record pricing. The scarcity of quality industrial product has forced investors who are bullish on Montreal’s manufacturing sector to price Class B assets more aggressively.
Serge Duval Senior Vice President National Investment Team www.cbre.ca/serge.duval
VIEW ALL CANADIAN CAP RATES
Q3 2016 CAP RATES DOWNTOWN OFFICE
rQ/Q
AA
4.75% - 5.25%
q
A
5.25% - 5.75%
q
B
5.75% - 6.50%
q
A
5.75% - 6.75%
tu
B
7.00% - 7.75%
tu
A
5.75% - 6.50%
tu
B
6.75% - 7.75%
tu
Regional
5.00% - 5.75%
tu
Power
5.75% - 6.75%
tu
Neighbourhood
7.00% - 7.75%
tu
Strip
5.25% - 6.00%
q
Strip (non-anchored)
7.25% - 8.00%
tu
High Rise A
4.25% - 5.00%
tu
High Rise B
5.00% - 5.75%
tu
Low Rise A
4.75% - 5.50%
tu
Low Rise B
5.75% - 6.75%
tu
Downtown Full Service
7.50% - 8.50%
tu
Suburban Limited Service
8.50% - 9.50%
q
Focused Service
8.00% - 8.75%
tu
SUBURBAN OFFICE
INDUSTRIAL
RETAIL
APARTMENT
HOTEL
ON PAGE 12
10
Halifax INVESTMENT TRENDS
Peninsular Halifax is seeing the most construction activity in memory, primarily for apartments.
Q3 2016 CAP RATES DOWNTOWN OFFICE AA
FOR RENT
Investment activity ticked up in Q3 2016 as REIT acquisitions increased across the region. The Halifax investment market has been dominated by smaller investment transactions and there have been no significant portfolio sales in 2016 year-to-date.
rQ/Q N/A
A
6.25% - 6.75%
tu
B
7.00% - 7.50%
tu
A
6.50% - 7.50%
tu
B
7.50% - 8.00%
tu
A
6.25% - 7.00%
q
B
7.25% - 7.75%
tu
Regional
5.50% - 6.00%
tu
Power
6.25% - 7.00%
tu
Neighbourhood
6.75% - 7.75%
tu
Strip
6.50% - 7.50%
tu
Strip (non-anchored)
7.50% - 8.25%
tu
High Rise A
4.75% - 5.25%
tu
High Rise B
5.00% - 5.50%
q
Low Rise A
5.00% - 5.25%
q
Low Rise B
5.25% - 6.00%
q
Downtown Full Service
8.75% - 9.75%
tu
Suburban Limited Service
9.50% - 10.50% tu
Focused Service
8.25% - 9.50%
SUBURBAN OFFICE
INDUSTRIAL
RETAIL
APARTMENT
Chris Carter Vice President National Investment Team www.cbre.ca/chris.carter
VIEW ALL CANADIAN CAP RATES
HOTEL
tu
ON PAGE 12
11
Q3 2016 Canadian Cap Rates rQ/Q
Vancouver
Calgary
Edmonton
Winnipeg
London-Windsor
Downtown Office AA
3.75% - 4.00%
q
5.25% - 5.75% tu
5.50% - 6.00% tu
A
3.75% - 4.25%
q
6.25% - 7.00% tu
6.75% - 7.25%
B
4.00% - 4.50%
q
7.75% - 8.50% tu
A
4.75% - 5.50%
q
B
5.00% - 5.50%
A B
N/A
N/A
5.50% - 6.00% tu
6.50% - 8.50% tu
7.75% - 8.50% tu
6.50% - 7.00% tu
8.00% - 9.00% tu
6.25% - 6.75% tu
6.75% - 7.25% tu
6.50% - 7.00% tu
7.50% - 8.00% tu
q
7.25% - 8.00% tu
7.50% - 8.00%
p
7.00% - 7.50% tu
8.00% - 8.50% tu
4.50% - 5.00%
q
5.00% - 5.50%
5.25% - 5.75%
q
6.00% - 6.50% tu
7.00% - 8.00% tu
5.00% - 5.50%
q
6.25% - 6.75% tu
6.75% - 7.50% tu
6.50% - 7.25% tu
7.75% - 9.00% tu
Regional
4.00% - 4.75%
q
5.00% - 5.50% tu
5.00% - 5.50% tu
5.50% - 6.00% tu
5.50% - 6.50% tu
Sector/Power
5.00% - 5.00%
q
5.75% - 6.25% tu
5.75% - 6.25% tu
6.00% - 6.50% tu
6.25% - 7.00% tu
Neighborhood
5.00% - 5.50%
q
5.25% - 5.75% tu
5.75% - 6.25% tu
6.50% - 7.00% tu
6.25% - 7.50% tu
Strip
4.75% - 5.25%
q
5.25% - 5.75%
5.50% - 6.00% tu
6.50% - 7.00% tu
6.00% - 7.00% tu
Non-anchored Strip Mall
5.00% - 5.50%
q
6.25% - 6.75% tu
6.50% - 7.00%
7.00% - 7.50% tu
6.00% - 7.50% tu
p
Suburban Office
Industrial q
Retail
q
q
Apartment High Rise A
2.50% - 3.00% tu
4.50% - 5.00% tu
4.25% - 4.75% tu
High Rise B
3.00% - 3.50% tu
5.00% - 5.50% tu
4.75% - 5.25% tu
5.00% - 5.75% tu
5.25% - 6.50% tu
Low Rise A
2.75% - 3.25% tu
5.00% - 5.50%
5.25% - 5.75% tu
5.50% - 6.00% tu
5.75% - 6.75% tu
Low Rise B
3.25% - 4.25% tu
5.25% - 5.75% tu
5.75% - 6.50% tu
5.75% - 6.00% tu
6.00% - 7.25% tu
Downtown Full Service
5.50% - 6.50%
q
7.75% - 8.75% tu
7.75% - 8.75% tu
8.00% - 9.00% tu
8.25% - 9.00% tu
Suburban Limited Service
6.50% - 7.50%
q
9.25% - 10.25% tu
10.00% - 10.50% tu
9.50% - 10.50% tu
8.50% - 9.50% tu
Focused Service
6.50% - 7.50%
q
8.25% - 9.25% tu
9.00% - 10.00% tu
8.00% - 8.75% tu
8.00% - 9.00% tu
p
N/A
5.00% - 5.50% tu
Hotel
Q3 2016 Canadian Cap Rates rQ/Q
Kitchener-Waterloo Toronto
Ottawa
Montreal
Halifax
Downtown Office AA
N/A
4.00% - 4.50%
q
5.00% - 5.75% tu
4.75% - 5.25%
q
N/A
A
6.00% - 7.00% tu
4.25% - 4.75%
q
5.25% - 6.00% tu
5.25% - 5.75%
q
6.25% - 6.75% tu
B
6.50% - 7.25% tu
4.50% - 5.00%
q
5.50% - 6.25% tu
5.75% - 6.50%
q
7.00% - 7.50% tu
A
6.25% - 7.50% tu
5.75% - 6.25% tu
6.25% - 7.00% tu
5.75% - 6.75% tu
6.50% - 7.50% tu
B
7.00% - 8.00% tu
6.75% - 7.25% tu
7.00% - 7.50% tu
7.00% - 7.75% tu
7.50% - 8.00% tu
A
5.90% - 6.50% tu
5.00% - 5.50% tu
6.00% - 6.25% tu
5.75% - 6.50% tu
6.25% - 7.00%
B
6.75% - 7.25% tu
6.50% - 7.00%
6.50% - 7.25% tu
6.75% - 7.75% tu
7.25% - 7.75% tu
Regional
5.50% - 6.00% tu
4.50% - 5.50% tu
5.00% - 5.75% tu
5.00% - 5.75% tu
5.50% - 6.00% tu
Sector/Power
5.75% - 6.50% tu
5.50% - 6.50% tu
5.75% - 6.50% tu
5.75% - 6.75% tu
6.25% - 7.00% tu
Neighborhood
6.00% - 6.50% tu
5.25% - 6.25% tu
5.75% - 6.50% tu
7.00% - 7.75% tu
6.75% - 7.75% tu
Strip
5.25% - 6.50% tu
5.25% - 6.25% tu
5.50% - 6.25% tu
5.25% - 6.00%
6.50% - 7.50% tu
Non-anchored Strip Mall
5.25% - 7.00% tu
6.25% - 7.25% tu
6.50% - 7.50% tu
7.25% - 8.00% tu
7.50% - 8.25% tu
High Rise A
4.50% - 5.00% tu
3.25% - 3.75%
q
3.75% - 4.50% tu
4.25% - 5.00% tu
4.75% - 5.25% tu
High Rise B
4.75% - 5.25% tu
4.00% - 5.00%
q
4.75% - 5.50% tu
5.00% - 5.75% tu
5.00% - 5.50%
q
Low Rise A
5.00% - 5.75% tu
3.25% - 3.75%
q
4.00% - 4.75% tu
4.75% - 5.50% tu
5.00% - 5.25%
q
Low Rise B
5.50% - 6.00% tu
4.00% - 5.00%
q
4.75% - 5.50% tu
5.75% - 6.75% tu
5.25% - 6.00%
q
Downtown Full Service
8.25% - 9.00% tu
5.50% - 6.50%
q
7.00% - 8.00% tu
7.50% - 8.50% tu
8.75% - 9.75% tu
Suburban Limited Service
8.50% - 9.00% tu
7.00% - 8.50% tu
8.00% - 9.00%
8.50% - 9.50%
9.50% - 10.50% tu
Focused Service
7.50% - 8.50% tu
7.00% - 8.00% tu
7.50% - 8.50% tu
Suburban Office
Industrial
q
q
Retail
q
Apartment
Hotel
q
q
8.00% - 8.75% tu
8.25% - 9.50% tu
GLOSSARY OF TERMS: Cap Rate: Estimates are provided by NIT members in respective markets based on market transactions and/or feedback from investors on their current yield expectations. AA Downtown Office: The downtown’s best office buildings, typically newer, larger than 800,000 sq. ft. with larger floor plates, attract larger, top quality tenants with 5 and 10-year leases. Class A Suburban Office and Industrial: Best of class product, recently completed to a high-standard, leases to better quality tenants on 5 and 10-year leases, typically newer construction. Class B Suburban Office and Industrial: Older product, mostly 5-year leases, typically previously owned. Regional: Enclosed malls, are the top performers in sales per sq. ft., has strong anchors and high percentage of National Tenants in CRU space. Typically >500,000 sq. ft. and has a department store as one of the anchors. Power Centres: Open-air retail centre comprised of larger, brand name tenants. Tend to be in a node with other anchor tenants. Limited CRU space and typically larger than 400,000 sq. ft. or in a node of that size.
Community/Neighborhood: Enclosed centre that serves a community and is generally anchored by some combination of a junior department store, supermarket, drug or sport store; supplies a wide range of apparel and soft goods. Can range from 150,000 sq. ft.– 350,000 sq. ft. Strip (Anchored): Open-air centre anchored by either food or drug. Strip (Non-Anchored): Open-air centre typically not anchored by either food or drug. Hotel: Rates indicated are based on normalized results after deduction of management fees and reserves for replacement. Focused Service Hotel: Upper-midscale lodging focused on rooms operations with limited food and beverage and meeting facilities; examples include Hampton Inn, Residence Inn.
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